Programmatic Trends to Watch in 2018

While the term “programmatic” has been in our industry for years, it continues to surprise, innovate, grow and change the digital media landscape. eMarketer predicts in 2018, 81.5 percent of digital display ad spending will transact programmatically. By 2019, 77 percent of digital video ad spending will happen programmatically as well. Innovations in programmatic ad tech, transparency, data and attribution are responsible for the growth we’ve seen at Empower. So, what’s next in 2018?

Consolidation

We’ll see continued consolidation in the programmatic ad tech space. In 2017, TubeMogul, Turn and Adelphic Demand Side Platforms (DSPs) were all acquired by larger ad tech companies looking to complete their offerings. For example, Adobe bought TubeMogul to complete its stack focused on creative, ad buying, measurement, and attribution. Completing stacks and offerings is one way to beat tech giants Google and Facebook.

Agency trading desks will consolidate DSPs and inventory suppliers to create efficiencies, promote transparency, and focus on building proprietary solutions. Consolidating DSPs allows programmatic specialists to optimize client campaigns better, rather than optimizing between six different DSPs. It will also allow agencies to work closely with selected top DSPs to integrate their proprietary agency innovations for brands like custom algorithms.

Lastly, agencies will begin to consolidate programmatic supply partners (SSPs). There are roughly 100 SSPs on the market, and most of them access the same publisher inventory. Agencies will begin to narrow down SSPs to those who don’t take hidden fees or buy-side fees, as well as work with providers who are transparent about their inventory supply chain.

Programmatic pricing will increase this year before stabilizing due to changing auctions.

Change in the traditional programmatic pricing model of second price auction is shifted to first price auction and will continue to grow. This will impact 2018 pricing.

Initially, prices will rise across the programmatic landscape. Brands and agencies who are asleep at the desk will drive prices up. Bidders who traditionally bid high, to win low, will win a high clearing price if not careful. It also means that those who are not willing to bid high enough may miss out on key inventory. Thus, it becomes increasingly important for brands to work with agencies on media pricing and bidding strategies to evaluate the true cost of each impression.

Fraud and brand safety issues will become more transparent, and improve with ads.txt

For years, the industry has been talking about how much fraud is in the programmatic supply chain, yet minimal improvements have been made. Sure, we’ve created solutions for monitoring and best practices to avoid it, but nothing has been done to truly make a great impact — 2018 will be a different year as we publishers roll out ads.txt.

So, what is ads.txt? Ads.txt is an approved IAB text file that prevents the unauthorized sale of inventory. Publishers are placing the text file within their website to declare who is authorized to sell their inventory. DSPs are working quickly to build technology to confirm a supplier’s right to sell inventory before the bid is accepted. This will help to eliminate fraud and buying inventory from an unknown source. Now that ads.txt exists, buyers will have a way to verify the impressions they bought were bought and sold the way they were intended.

Measurement and attribution are becoming table stakes

The biggest challenge we face as marketers is knowing if advertising works. While we still have improvements to make, programmatic is making it easier to measure and attribute digital advertising. By a click of a button within a DSP, we can now measure in-store traffic and obtain reporting in near real-time via a dashboard. DSPs are also making it easier for advertisers to create test and control groups to measure campaign impact to online sales. New partnerships between DSPs and big data companies are also enabling in-campaign attribution and optimization to in-store sales, a long-awaited solution for the CPG industry. Instead of waiting post campaign, we can measure and attribute now and make optimizations to impact performance in flight.

It’s an exciting time for programmatic evolution. All of these programmatic trends will evolve and improve the industry as we know it today. Consolidation will allow great partners to succeed and increase agency productivity and innovation. Pricing evolution and ads.txt will put the programmatic marketplace on a level playing field with site verification and better bidding processes. Finally, innovations in measurement and attribution will allow us to prove media works.

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